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Report praises cigarette tax for reducing smoking, raising revenue

01/06/05

LARAMIE, Wyo. (AP) -- A tax increase approved in 2003 has reduced cigarette use and bolstered state revenue, and experts believe another increase would do the same.

The excise tax increase boosted revenue from around $500,000 per month to $1.5 million per month, according to a report by the University of Wyoming's Survey and Analysis Center for the Wyoming Department of Health.
Revenue was up despite the fact that the number of packs sold fell 17.4 percent over the year following the increase, university officials report.
Marc Homer, assistant research scientist with the center's Tobacco Prevention and Control Evaluation team, speculates that another tax increase would further boost revenue while further slowing cigarette consumption.
He points out that cigarette excise taxes are still higher in surrounding states. "Currently the average per-pack tax for Wyoming and the six states on its borders is 80 cents," he said.
In Montana, a recent increase put the excise tax much higher: $1.70.
"States with cigarette excise taxes higher than Wyoming's, such as California (87 cents) and New York ($1.50) have successfully reduced consumption while increasing revenue," the report says.
"Spit tobacco use in Wyoming is more than double the national average. Increasing the excise tax on other tobacco products in Wyoming could similarly benefit the state by increasing revenue and by deterring adults and youths from using spit tobacco and other products."
The report cites studies showing that a 10-percent increase in cigarette prices reduces overall smoking among adults by about 4 percent. "A consensus view is that for every 10-percent rise in price, there will be a 7-percent decrease among young people smoking," the report says.
The Centers for Disease Control estimates that smoking-caused health costs nationwide add up to $7.18 per pack sold in the United States.